I would like to start this letter by thanking you for being an excellent vendor over the last {number} years. We have appreciated your timeliness and quality of product, and that consistency has been a great asset to us. However, I'm sure you're aware that our contract is coming to an end on {date}, and we find that we no longer have the budget for the prices we originally agreed upon.
I'm hoping that you will be open to a negotiation regarding the structuring of our agreement and the cost of doing business together. Due to {reason}, we have had to scale back {department}, and therefore our budget can no longer exceed {amount}. I have been informed by my superiors that if we cannot meet our budget, they will seek bids from outside vendors.
I'm really hoping to be able to continue our partnership, as I feel it has been mutually beneficial and wonderfully consistent for a long time. Please let me know if you are open to negotiation so that we can find a new solution that will work for both of us.
Thank you for your time.
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